Global economy offers many opportunities

Friday

Jun 1, 2012 at 12:01 AMJun 1, 2012 at 10:29 AM

Nearly three years after experts tell us the Great Recession officially "ended," the United States remains mired in a sluggish economic recovery. The U.S. must create about 11.2 million more jobs to recover the jobs lost during the downturn and keep pace with labor-market dynamics.

Nearly three years after experts tell us the Great Recession officially “ended,” the United States remains mired in a sluggish economic recovery. The U.S. must create about 11.2 million more jobs to recover the jobs lost during the downturn and keep pace with labor-market dynamics. Beyond pure job growth, however, the U.S. needs better jobs to grow wages for lower- and middle-class workers and to reverse the troubling decades-long rise in inequality.

If there is a silver lining to the Great Recession, it is that the U.S. economy appears to be undergoing a fundamental shift from an inwardly focused, consumption-fueled growth model to one that is globally engaged and driven by production and innovation. Manufacturing has contributed nearly 38 percent to gross domestic product growth post-recession, fueling a significant jump in exports. In the past two years, exports accounted for 46 percent of GDP growth, despite comprising only 13 percent of total U.S. GDP.

Ohio is well-positioned to thrive in a more innovative, productive and export-oriented economy. It is a state driven by metropolitan areas, and metros concentrate the supermajority of people, jobs and economic output both in Ohio and the U.S. at large. Ohio’s 16 metros are home to 81 percent of the state’s population and nearly 86 percent of Ohio’s GDP. These metros also generate 77 percent of the state’s total exports and are major hubs of manufacturing in sectors that serve domestic and international markets.

Despite the large presence of state government and Ohio State University in the region’s economy, Columbus is one of Ohio’s main manufacturing and export centers. A recent report by the Brookings Metropolitan Policy Program reveals that the Columbus region is the 29th largest manufacturing jobs center in the United States, with about 63,159 jobs in 2010. These jobs span a broad array of manufacturing sectors, including large shares in motor vehicle and parts manufacturing, food and beverage production, and nonmetallic mineral-products manufacturing — cement, bricks, glass, etc.

After a tough decade, Columbus has experienced a strong rebound in manufacturing post-recession, outpacing the national average in manufacturing job growth during the past two years.

What can a metro like Columbus do to boost its manufacturing sector and take advantage of rapidly growing markets abroad? With Washington adrift, the metro and the state would benefit from a newly sharpened focus.

At a forum last month in Columbus sponsored by the Global Cities Initiative, a joint project of Brookings and JPMorgan Chase, several major opportunities came to light.

First, the region should craft and implement a growth strategy that builds on its special position in the global economy. The recent report by the Columbus Council on World Affairs provides a strong base for action, and the business planning effort under way in northeastern Ohio provides an excellent model to replicate. Developing a unified strategy for growth will require Columbus and leaders throughout the entire eight-county metropolitan area to collaborate to compete in the global economy rather than compete against each other.

Second, the metro should forge ties to growing metros in rising nations such as China, India and Brazil. Bruce Katz of the Brookings Institution argues that the 21st-century global economy is shaping up as a network of trading cities, what he calls “a new silk road.” Columbus needs to find the right partners in emerging markets and then foster relationships across the government, civic, corporate and university sectors. Businesses and local governments in the Columbus area should take advantage of their proximity to OSU as a resource for training students with skills necessary for jobs in the global economy and for assisting businesses trying to reach markets abroad.

Finally, the Columbus region should build a stronger partnership with the state, to set a solid platform for manufacturing and export growth generally, while building on the special strengths of Columbus.

Columbus is fortunate in several respects. The state’s Third Frontier program, replenished through a $700?million bond referendum in 2010, already is considered a model for state support for technological innovation. The Edison Welding Institute in Columbus, seeded originally with state resources, provides applied research and manufacturing support to firms across a range of sectors, including aerospace, automotive, defense, energy and rail.

With the formation of JobsOhio, its private economic-development corporation, Ohio appears to be serious about improving its efforts to attract foreign direct investment and empower the distinct regional economies of the state.

Ohio and Columbus have the tools to flourish in the global economy. With the federal government absent, will state and metropolitan leaders do what it takes to realize their potential?

Richard M. Daley, a former mayor of Chicago, is chairman of the Global Cities Initiative.

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